How can nonprofits grow and thrive while honoring the desires of donors who want most or all of their money to directly fund programs? By creatively applying private-sector funding approaches to support operations and by using artful storytelling to keep donors engaged, say the leaders of three pioneering nonprofits.
Bartlomiej Jan Skorupa, founder and executive director of Groundwork Opportunities (GO); Katherine Woo, vice president of product at Kiva.org; and Pamela Hawley, founder and CEO of UniversalGiving™ shared their successful strategies at New Resource Bank’s spring re:think event.
Creative ways to fund operations
Kiva, the nonprofit that popularized microlending over the Internet, realized early on that scaling its impact would involve major operational expenses, but it didn’t want to use loan money to fund them. The solution: Kiva asked donors to help underwrite the organization’s costs with a “tip” on top of their microloans (a strategy later adopted by UniversalGiving and GO). According to Woo, about 5 to 6 percent of donors make a contribution tagged for operations. Now that Kiva is experiencing donor fatigue with that approach, it is exploring new options—for example, instead of a tip on top of your microloan, how about a tip when your loan is repaid? Kiva also keeps staffing costs down by cultivating a dedicated corps of volunteers and interns.
GO, a provider of startup capital and guidance to leaders in the developing world who’ve designed sustainable programs to address community issues, has brought together a group of investors and philanthropists to support its core operations. “The Community” is a membership program for GO’s most dedicated donors, who give yearly support at one of three levels, ranging from $2,500 to $10,000. Donors at each level get a business started in their honor.
UniversalGiving, which helps people give money to and volunteer on vetted projects, takes a venture capitalist approach to both the projects it promotes and its own sustainability. “When venture capitalists consider prospects, they want to meet their management teams. When we investigate projects, we meet the management teams,” says Hawley. In addition, the organization spun its proprietary Quality Model™ system for vetting projects into a revenue source: UniversalGiving Corporate, a tool for Fortune 500 companies that want to expand their corporate social responsibility programs worldwide.
Stories drive donor engagement; impact metrics matter
According to Hawley, at UniversalGiving stories drive about 80 percent of donor engagement and metrics (data on what the money buys and its impact) drive the remainder. Woo says stories were the critical investment that made the difference in Kiva’s success: “Story is what compels lenders to act.” She also notes that impact metrics are key for a significant minority. Kiva has found that donors who give the largest amounts are driven by getting the biggest possible social payoffs from their investment.
Because stories play such an important role for most donors, Kiva, GO and UniversalGiving devote significant resources to producing compelling project profiles. Their aim is to help potential lenders connect with the people behind the projects, to put a face to the need. Any detail in a profile or a photo may be a trigger for a donor to act, they say.
Lessons for other nonprofits
Hawley, Skorupa and Woo highlighted some of the principles that animate their nonprofits. First, live your values: if you believe your organization should be giving 100 percent of donations not specified for operations to programs, don’t back down. Sacrificing values negatively affects organizational culture and undermines efforts to attract talent. Second, diversify funding sources and be prepared to tweak your funding model. Third, sustainability requires adaptability: the marketplace changes, so trying new services and benefits is critical.
For more insights on creative nonprofit sustainability strategies, check out the event webcast.